ARMED with the freedom to fix tariffs, general insurance companies have driven down auto insurance premiums by 20-40% in their scramble for a larger pie of the shrinking car market.
Insurers are being forced to increase business volumes by offering huge discounts, especially on policy renewals, with premium collection falling by around 60% due to fewer car sales and lower tariffs. New car sales have fallen by 15.5% in the quarter ended December 2008. Overall, car premium collections have fallen by 20-30%.
Sample this: A car owner who paid Rs 35,000 premium for a Honda Civic bought last year is required to pay only Rs 15,000 this year. Without a special discount of around 35% from a private insurer, he would have paid Rs 23,000. The renewal premium falls in subsequent years as insurers factor in depreciation in the carâ€™s value.
Private insurers such as ICICI Lombard and Reliance General are among the players that offer lowest tariffs.
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